Announcement of China Launches Projects in Provincial Development and Road Transport on May 14, 1987

' . FOR IMMEDIATE RELEASE World Bank 1818 H Street. N.W., Washington, D.C. 20433, US.A. BANK NEWS RELEASE NO. 87/66 Contact: Pastor B. Sison IDA NEWS RELEASE NO. 87/69 (202) 477-3653 CHINA LAUNCHES PROJECTS IN PROVINCIAL DEVELOPMENT, ROAD TRANSPORT WASHINGTON, May 14 -- The People's Republic of China is launching a project to develop one of its poorest provinces in the semiarid northwest, and another project to meet the growing demand for transport services between Beijing, the capital, and Xingang, a new seaport. The World Bank is supporting both projects with loans totaling $45 million. The International Development Association (IDA), the Bank's affiliate for concessionary lending, is helping finance the projects with credits amounting to SDR 218 million ($275.5 million). The target of the first project is Gansu province whose population is about 20 million and growing by as much as 2 percent each year. About three- fourths of the labor force in the project area are farmers. The project aims to reduce poverty and raise rural incomes. ( The project consists of three parts -- agriculture, education, and industrial diversification -- which IDA is supporting with credits totaling SDR 119.1 million ($150.5 million). In support of the diversification scheme, the World Bank has approved a loan of $20 million to help light and rural industrial enterprises finance some 22 subprojects that would promote labor productivity, especially in the rural areas. Some 96,000 rural households are expected to benefit from improved irrigation and land development. Yields on about 133,000 hectares of land will increase as a result of soil conservation and new farming methods. The labor force is expected to become more productive with the improvement in the quality and management of basic education, and with better access to primary and secondary schools in the rural areas. Dependence on agriculture will decrease as a result of diversification. There will be more jobs in industry, and labor will be more productive. Also, the subloans to enterprises will meet Gansu's demand for investment financing as well as provide the opportunity to apply a system of appraisal on a province- wide basis. (more) Note: Money figures are expressed in U.S. dollar figures. IDA credits are denominated in SDRs (Special Drawing Rights), which are valued on the basis of a "basket" of currencies. The U.S. dollar equivalent of the SDR amount of the IDA credit reflects the exchange rates existing at the time of the negotiation of the credit.  -2- 1 , In addition to the Bank loan and IDA credits, financing is being provided by the central government ($80 million), the provincial government ($56.6 million), Gansu Investment and Trust Company ($10 million), and equity from subproject sponsors ($6 million). The second project involves the construction of China's first tolled expressway -- 142 kilometers long -- connecting Beijing and Tianjin with the new port of Xingang at Tanggu. Two other connecting roads will be built. The expressway will be a four-lane divided highway with controlled access. The project is expected to meet the increasing demand for transport in the Beijing-Tianjin-Tanggu corridor, which resulted from growing economic activity at the Tanggu port. The World Bank has approved a loan of $25 million while IDA is providing a credit of SDR 98.9 million ($125 million) in support of efforts by the government to remove economic bottlenecks. Other financing for the $275.5 million project will be provided by the government. The project will help identify the best method of financing roadworks as well as examine the potentials of charging tolls to vehicles. Improved techniques for road planning will be introduced, and research to upgrade the quality of local bitumen, an ingredient for road paving, will be assisted. Also, the project will assist in determining the appropriate type of organization to operate and maintain the expressway. Equipment and training will be provided to staff of the Ministry of Conununications. Assistance, which began in an earlier project involving the construction and improvement of ) national and rural roads, will continue. The Bank loans are for 20 years, including five years of grace, with a variable interest rate, currently 7.92 percent, linked to the cost of the Bank's borrowings. They also carry an annual conunitment charge of 0.75 percent on the undisbursed balances. The IDA credits are for 50 years, including 10 years of grace; they carry no interest but have annual charges (0.5 percent on the undisbursed balances and 0.75 percent on the disbursed balances). I